This webpage
is for you, students taking this course from me (Tran Huu Dung) at Wright
State University. If you are taking this course from other professors,
this page is not for you. I do have some stuffs that might be of
interest to visitors, please click
here to go to the main gate to my homepage, and navigate from there.

Informationabout
the course is detailed in the syllabus distributed in class.
If you have misplaced your copy, email
me, I'll send you a replacement.

If this is the
first time you are taking a course with me, please send
me an email ASAP to introduce yourself (your name, your major,
your aspiration, and anything you care to tell me). The more I know
about you, the better I can tailor the course to your background and your
needs.

Visit this page
as often as possible (it's a good idea for you to bookmark it). Also
visit the companion page, Readings
on Economic Life. I post new articles here first, then archive
them in that page.

See you in class!

THD

OBJECTIVES
OF THE COURSE

This course is designed to introduce economics
to non-business majors. It offers students a broad knowledge of economic
issues and institutions relevant to the contemporary world, and provides
them with the basic rules for efficient decision making for households
and business firms. Topics include supply and demand, costs, profits,
fiscal and monetary policies. Special attention is paid to international
economic relations.

This course is part of the General
Education (GE) curriculum at Wright State University. As such, it
tries

(1) To make you a more critical
thinker, a better problem-solver, and a more effective communicator.
Your whole life will be much better that way.

(2) To make you more deeply aware
of what's good and what's bad, morally and ethically, so you can be a more
valuable member of mankind.

(3) To make you know more, and understand
more, both the past and the present, and how the future will be shaped.

SUMMER 2003
TENTATIVE SCHEDULE

.

Week

Date

Topic

Chapter

1

M

T
W
Th

Introducing the Economic Way of Thinking
Production Possibilities and Opportunity Cost
Market Demand and Supply
Markets in Action
Production Costs

1
2
3
4
6

2

M
T
W
Th

Perfect Competition
Monopoly
Labor Markets and Income Distribution
FIRST MIDTERM

!EQUIPMENT
NEEDED:Pencil or penCalculator (optional)Brain(But NO notes, NO books)

!TYPE
OF EXAM:10 True-False questions30 Multiple Choice questions

!HOW
IMPORTANT IS THIS EXAM?30% of the total score for the course

!WHAT
TO STUDY IN THE TEXTBOOKChapters 12, 13, 14, 15

!
MAKE SURE THAT YOU KNOW:

1. Definition of GDP (real
and nominal), disposable personal income2. How to measure unemployment,
different types of unemployment3. How to measure inflation, real
and nominal income4. Aggregate demand and aggregate
supply5. What could cause AD and AS to
shift6. Shapes of AS curve according
to various schools of economists7. Cost push inflation and demand
pull inflation8. Graphical analysis of equilibrium
GDP and price level using AD and AS curves9. Fiscal policy

REVIEW
FOR FIRST MIDTERM

!WHEN?
TUESDAY OCTOBER 9, 2001

!WHERE?
REGULAR CLASSROOM (You should know where it is)

!EQUIPMENT
NEEDED:Pencil or penCalculator (optional)Brain(But NO notes, NO books)

!TYPE
OF EXAM:10 True-False questions30 Multiple Choice questions

!HOW
IMPORTANT IS THIS EXAM?30% of the total score for the course

!WHAT
TO STUDY IN THE TEXTBOOKChapters 1, 2, 3, 4, 6, 7

!
MAKE SURE THAT YOU KNOW:

1. The concept of
scarcity2. The definition of economics3. Opportunity costs4. Production possibilities
curve5. Demand, quantity demanded,
demand schedule, demand curve, substitutes and complements, normal goods
and inferior goods.6. Supply, quantity supplied,
supply schedule, supply curve7. Law of demand8. What could cause the
demand curve to shift.9. What could cause the
supply curve to shift10. Market equilibrium11. Effects of demand and/or
supply curve shifts on market equilibrium12. Price ceiling, price
floor13. Short run and long run14. Production and the law
of diminishing returns15. Fixed costs and variable
costs16. Characteristics of a
perfectly competitive firm17. How a perfectly competive
firm maximizes its profits

How
to Stimulate the Economy? [Economist 10/4/01]--Central banks have
reduced interest rates to their lowest levels for decades. But have they
done enough to revive the sickly world economy?

Wall Street JournalOctober 8, 2001

High Employment Appears to Be Over In Wake of AttacksFormer Welfare Recipients Who Found
Work Now Get Apologies and Pink Slips
By JACOB M. SCHLESINGER and RUSSELL GOLD

.....

Beyond the obvious economic damage of Sept. 11 -- the stock-market plunge,
sputtering airlines and the heightened risk of recession -- lurks another
threat: an end to the late-1990s golden era of low unemployment.

Until the mid-1990s, most economists thought the "natural," long-run
unemployment rate for the modern American economy was about 6%. Anything
lower for any extended period of time would cause inflation to gallop out
of control, the experts said. In mid-1997, the experts were proved wrong,
as the jobless rate fell below 5% for the first time since 1973 -- and
prices stayed low. The jobless rate hasn't returned to 5% since. But that
is almost certain to change.

On Friday, the Labor Department released its monthly employment report
for September, which said the unemployment rate remained at 4.9%, the same
as in August. But the report was based on surveys taken before the wave
of post-Sept. 11 layoffs. And even the report's earlier data suggest a
considerable weakening of the labor market, pointing to higher joblessness
in the future -- and pain for the less-well-off Americans who benefited
from the late-1990s boom. Businesses cut payrolls by 199,000 in September,
the biggest monthly contraction of jobs since February 1991, during the
last recession. Since January, payrolls have fallen by 800,000.

The ultra-low jobless rate of the late 1990s stemmed from the rapid
overall growth of that period. From 1997 through 2000, the economy expanded
at a 4% annual pace, well above the 2% to 3% rate most economists had considered
the country's speed limit. The technology boom, globalization, the federal
government's move from deficits to a surplus -- all of these helped spur
a sustained expansion of jobs.

Faster growth meant factories produced more, stores sold more, and companies
of all kinds needed more workers than in any other recent period in American
history. Among those who benefited the most were high-school dropouts,
racial minorities and immigrants. To cope with short-run labor shortages,
companies expanded training, which, in turn, paid long-term dividends to
trainees.

With competition for workers becoming more intense, companies had to
raise wages -- and offer benefits -- for many entry-level workers. Poverty
rates dropped. Millions of women moved off welfare rolls and onto payrolls.
A quarter-century trend toward ever-wider income inequality slowed.

All of those developments now are threatened. Even before Sept. 11,
demand for workers was falling. Since the attack, the labor market has
deteriorated sharply, especially in industries such as travel and tourism,
which have been among the biggest sources of entry-level jobs in recent
years.
....
A surge of layoffs, which began before Sept. 11 and has intensified
since, comes at a time when the government safety net has been weakened.
The federal government and states have made it harder for people to qualify
for welfare and have limited the funds available for benefits.

Meanwhile, many people who are laid off -- especially those who have
just left welfare -- are finding it hard to obtain state unemployment insurance.
States often require workers to have held a job for a certain length of
time and peg insurance payments to income level.
.....
To help cushion the economic blow of Sept. 11, President Bush last
week proposed to make additional federal money available to the hardest-hit
states to extend the duration of unemployment benefits and to make it easier
for unemployed workers to qualify. Democrats in Congress are pushing for
a more generous package.

There is less movement in Washington on providing affordable health
insurance to those who lack it, including many of the now-laid-off low-wage
workers who can't afford to pay the premiums to continue coverage. Boston's
Ms. Vanriel says her Park Plaza insurance runs out in November. She doubts
she can afford the $600 monthly payments needed to continue that coverage.
Yet she isn't sure she can afford not to: One of her daughters has a lump
in her breast, which hasn't been diagnosed, but Ms. Vanriel fears it could
be cancer.

Some good news is mixed with all the bad. The Sept. 11 attack has led
some businesses, such as security firms, to step up hiring of entry-level
workers. "Our placement rate in New York hasn't really changed much over
the last three months," says Peter Cove, founder of America Works Inc.,
a New York-based firm that specializes in finding jobs for welfare recipients
and other hard-to-employ people. "There's been a shift in demand," he says,
with airport food-service vendors cutting back but "a real uptick for us
at security companies." After one of Mr. Cove's clients, Tremayne Rice,
a 20-year-old high-school dropout, lost his $7.50-per-hour maintenance
job at New York's John F. Kennedy airport, he quickly found work as a 40-hour-a-week,
$7-an-hour property guard elsewhere in New York.

As long as the unemployment rate doesn't rise too much for too long,
some progress from the 1990s will endure. Many of the people who joined
the labor force over the past five years but are now losing jobs will be
better prepared to find new ones in the future.

When Ronald Reagan National Airport in Washington was shut down from
Sept. 11 to Oct. 4, Sheila Johnson, a 39-year-old mother of three, was
laid off from her $5.15-an-hour job as a passenger escort. She's back now,
but equally important, she says, having her first paid job in 17 years
has given her the confidence to think she might be able to find another
one if she has to. "At least I have a foot in the door," she says.

Getting a foot in the door was a big part of the story of the 1990s.

The U.S. enjoyed periods of strong growth in the 1970s and 1980s. But
a large group was left behind. From late 1974 through 1994, the jobless
rate mainly stayed above 6%. Wages and salaries for lower-income and even
middle-class workers stagnated, barely rising through the 1980s and early
1990s. Meanwhile, the gap between the best-paid and worst-paid soared.
The share of total income paid to the top 5% rose to 21% in 1993 from 15.6%
in 1981.

That changed with the expansion that began in March 1991 and kicked
into high gear five years later. By September 2000, the jobless rate had
fallen to 3.9% for the first time since 1970. For African-Americans, the
rate fell to 7.2% at one point, the lowest level since the government started
keeping such statistics in 1972. The percentage of working-age Americans
working or seeking work hit a record 67.4%.

Pay rose. From 1994 through 1999, median household income increased
14%, hitting $42,187 in 1999 before slipping in 2000, to $42,148. By March
of 2001, the percentage of American households living below the poverty
line had fallen to 11.3%, the lowest level since 1973.

When President Clinton signed into law sharp cutbacks in public assistance
in 1996, critics predicted a surged in poverty, as inexperienced people
were pushed into a wary labor market. Instead, the unanticipated rise in
demand for workers boosted employment rates for those leaving welfare higher
than expected, says Sheila Zadlewski, a researcher at the Urban Institute,
a think tank in Washington. Studies published earlier this year found that
about 40% of former welfare recipients had found full-time work, she says.
Another 20% had found part-time work. The median wage for those workers
was about $7.15 an hour, a full $2 above the minimum wage.

Then, with economy slumping, the planes smashed into the World Trade
Center and the Pentagon. Already-weakening demand for the least-skilled,
least-experienced workers declined further. The jobless rate for African-Americans
in September was 8.7%, more than a full percentage point higher than the
recent low. The jobless rate for high school dropouts hit 7.8%, also well
above the expansion's low and a sharp jump from August.

Companies are getting choosier about whom they hire and less generous
to those they do hire. During the boom, some employers took unskilled workers
and incurred the expense of teaching them job skills. But in recent months,
Ecolab Inc. of St. Paul, Minn., has halted most of its on-site math classes.
"We are not trading down any more, saying I would like to have someone
with a high school degree and five years experience, but I'll settle for
someone with the high school degree and no experience," says Diana Lewis,
senior vice president of human resources for the manufacturer and distributor
of industrial cleaning products.

In Detroit, not so long ago, some auto makers were hiring inexperienced
temporary workers after arranging for them to shadow a company employee
for a month. Now, the manufacturers increasingly are demanding temps who
have actual experience working for them for at least a few months.

For a growing number of workers, the job market has dried up completely.
In September, 60.6% of unemployed workers had been out of a job for at
least five weeks, up from 54.5% a year earlier.

New York TimesSeptember 23, 2001

The Prospect of a War Without a Wartime Boom

By RICHARD W. STEVENSON

WHATEVER else they are, wars are usually good for the economy, at least
in the short run. World War II completed the job of pulling the United
States out of the Depression. Vietnam helped fuel a nearly decade-long
boom during the 1960's.

This time, however, someone forgot to tell the stock market. When Wall
Street got back to business last week, the Dow plummeted 14.3 percent,
its worst one-week performance since 1933.

This, as President Bush has said repeatedly, is a new kind of war. And
it will be fought by a nation whose muscle derives in part from having
a new kind of economy, one whose response to the war is unlikely to follow
any previous script.

The attacks on the World Trade Center and the Pentagon clearly dealt
a sharp blow in the short run to commerce, the financial system and consumer
confidence. The business expansion that began in 1991 and reached record
length at the beginning of last year, bringing unemployment to 30- year
lows and the federal budget surplus to a record high, may finally have
come to an end. The airline industry teetered on the brink of financial
collapse last week as planes flew almost empty.

Conceivably, some quick, visible progress on the military front, combined
with credible efforts to ensure security at home, could lead to a rapid
return to normalcy. But the prospects for such a benign outcome don't seem
good.

It is hard to predict the effect a prolonged campaign against terrorism
will have on a form of capitalism built around risk-taking, technological
advances, lightning-fast reactions and a willingness to let goods, money
and people move freely.

This is not going to be a conflict in which housewives flock to factories
to build fighter planes. It may not even be one in which consumers, rather
than going to the mall, sit around for weeks watching cruise missiles streak
into foreign capitals on CNN.

But it could be one in which the national, and global, psychology, now
more than ever a vital determinant of economic vibrancy, is affected for
a long period. And despite the appeal to investors to buy stocks as a patriotic
duty, financial markets, the modern economy's central nervous system, are
almost sure to remain jittery if not depressed.

Consumers, suddenly fearful of losing their jobs or feeling poorer as
their stock portfolios erode, could choose not to buy that new car or splurge
on that blouse. The willingness to gamble, to invest time, money and energy
in an idea, could be blunted, sapping the nation's entrepreneurial spirit.
"If it changes the way we do business on a long-term basis by imposing
risks on air travel, creating incentives to disperse financial activities
and culturally making people more cautious," said Peter Morici, a senior
fellow at the Economic Strategy Institute, a research organization, "then
we're going to have a terrorist tax on growth. It would rob us of a piece
of that new economy."

After dealing with the immediate crisis of keeping the financial system
operating and getting Wall Street up and running again — an effort that
was encouragingly successful — economic policymakers began trying last
week to sort out all the uncertainty.

After initially rushing toward adoption of a big stimulus package, to
be paid for out of a budget surplus that had previously been reserved for
debt reduction, Congress and the White House pulled back abruptly last
week. They did so largely at the urging of Alan Greenspan, the Federal
Reserve chairman, who said there was as much risk in overreacting or choosing
the wrong antidote as in delaying or acting too timidly.

The Fed itself acted forcefully after the attacks, cutting interest
rates and making sure banks and investment firms had all the cash they
needed. Congress and the administration hastily drew up and debated legislation
to keep the airlines solvent. And there may still prove to be a need for
a combination of new tax cuts and additional spending to spur more economic
activity by individuals and businesses, Mr. Greenspan said.

But the degree of help the economy needs cannot be assessed accurately
for a few weeks, he said. And there is a risk, he added, that a rush to
prop up the economy would prove counterproductive if the government could
no longer afford to make good on its plan to pay off most of the national
debt in the next decade. That would leave less money in the economy for
investment in businesses, which would drive interest rates higher than
they would be otherwise.

Mr. Greenspan's warning had the effect of torpedoeing an effort by some
Republicans to push through a quick passage of tax cuts, including a reduction
in the capital gains tax.

THUS far, despite the mounting toll of layoffs, the loss of hundreds
of billions of dollars in stock market wealth and a new consensus among
economic forecasters that the United States has entered a recession, Mr.
Bush and his team tried to emphasize the positive. Treasury Secretary Paul
H. O'Neill even suggested that it might be a good time to buy stocks.

But investors peered into the future, saw little to cheer about and
sold. Companies began delaying or canceling expansion plans, and warning
that they would reduce their work forces. Japan, which has been wallowing
in a slump for a decade, looked more wobbly than ever, as did other industrialized
and developing nations. If the United States falters, it will further hurt
the international economic outlook — which in turn will deepen problems
at home.

Mr. Greenspan has devoted considerable time in recent years to studying
the psychology of economic shocks and panics. One of the economy's strengths
is that technology has allowed businesses, investors and consumers to spot
change even as it is occurring and respond almost instantaneously. Such
speed is usually a good thing. But sometimes, Mr. Greenspan has suggested,
it blows our economic circuits.

"It has become evident time and again that when events become too complex
and move too rapidly," Mr. Greenspan said in a speech several years ago,
"human beings become demonstrably less able to cope. The failure of the
ability to comprehend external events almost invariably induces disengagement
from an activity, whether it be fear of entering a dark room, or of market
volatility."

Right now the American economy seems to be poised at that doorway. And
no one knows whether the lights on the other side are on or off.

September 19, 2001

WASHINGTON -- The U.S. steel industry, alluding to last week's terrorist
attacks, says that safeguarding its health is a matter of national security
that warrants unprecedented trade protections and strong sanctions against
foreign steelmakers.

Industry representatives also are calling on financial institutions,
which in recent years have shunned most steelmakers, to provide capital
to keep operations going.

Steel lobbyists, union leaders and elected officials from steelmaking
states are presenting their arguments this week in hearings here before
the International Trade Commission, an independent federal agency charged
with determining whether the domestic steel industry has been injured due
to a surge of imported steel since 1998.

Last week's events have provided them with a new argument: that domestic
steel is vital in serving the military, rebuilding New York and Washington
and maintaining the nation's infrastructure. Some steelmakers, such as
Bethlehem
Steel Corp., Bethlehem, Pa., and Ipsco
Inc., Lisle, Ill., which make heavy plate for shipbuilding, have seen their
stocks rise this week.

"Last Tuesday, our steel crisis, already a national security threat,
became a national emergency," Sen. John Rockefeller IV, a West Virginia
Democrat, told the ITC board. "Without steel, we cannot guarantee our national
security. Without steel we cannot rebuild from our national tragedy."

The world steel industry is in the middle of one its most unprofitable
and volatile periods ever. Domestic steelmakers have been mired in red
ink and foreign steelmakers absolutely need to continue selling in the
relatively open U.S. market to stay profitable. About 20 U.S. steel makers
have filed for Chapter 11 bankruptcy-law protection since 1998, in part
due to a glut of steel that sent prices to 20-year lows.

Concerned with the alarming number of steel bankruptcies, President
Bush in June instructed the ITC to launch an investigation under Section
201 of the 1974 trade act and recommend whether he should, in effect, wall
off the country from key steel products. The ITC is expected to come up
with its recommendations toward the end of the year and President Bush
is expected to announce his decision sometime in February.

Though imports have begun to fall this year, the level is still higher
than before 1998. Foreign steelmakers argue that the market is beginning
to correct itself because of falling imports and that there is no need
for more trade sanctions. Domestic steelmakers argue that the damage already
has been done to their companies and that the imports are lower because
overall demand is lower.

Domestic steel makers have tried to cover their debts by raising prices
for key steel products, but consumers refused to pay. Very few major steel
makers are profitable. Nucor
Corp., Charlotte, N.C., and AK
Steel Holding Corp., Middletown, Ohio, managed to make money last year
because of lower costs. The industry is hovering around 75% capacity, a
level too low to be profitable for many companies. And it doesn't look
as if the next few quarters will bring any relief. Analysts have downgraded
steel stocks because of forecasts of slowing demand.

Robert Lighthizer, an attorney who represents Pittsburgh-based USX-U.S.
Steel Group, Bethlehem and National
Steel Corp., Mishawaka, Ind., all domestic integrated companies that
have been losing money, said there is no question that the domestic steel
industry has been injured. "The cause, foreign imports, is clear to us,"
he said.

William Barringer, a lawyer representing foreign steel interests, told
the ITC that domestic steelmakers are hurting because of poor investments,
inefficient capacity and failure to be competitive. "This is not about
national security. And despite the tragic events of last week, this is
not about what happened last week."

Charles Bradford, a steel analyst for Bradford Research, said an infinitesimal
amount of steel is used in military applications. He calculates that less
than 0.09%, or about 31,000 tons last year, is used for tanks and ships.
Generally, airplanes and missiles and other war tools require lighter metals
such as aluminum or composites of specialized metals, such as titanium.

But Leo Gerard, president of the United Steelworkers Union, who has
argued for months that steel is vital to national security, says that looking
at steel only for military applications is shortsighted. Steel is used
in bridges and roads and buildings, he said. "Why should we rebuild America's
infrastructure with foreign steel?"

Mr. Gerard said the union will be sending out a letter as early as Wednesday
to Wall Street financial institutions, Senate finance and banking committees
and other officials making the case for investing in steel companies and
other manufacturers. Lenders have practically abandoned the steel industry,
regarding the companies as too high-risk. "The letter will be a little
more assertive on the issue of national security," Mr. Gerard said.

As the ITC hearings continue, dozens of foreign steelmakers have gathered
in Paris this week to discuss an initiative to cut capacity from the steel
market. It will be a difficult measure to achieve because no steelmaking
country wants to close plants and lay off thousands of workers to better
balance demand and supply. The world makes about 10% more steel than it
needs, and if its economy continues to falter, the gap between supply and
demand is sure to get wider. That would hit U.S. steel companies, with
their high production costs, the hardest.

Both foreign and domestic steel makers expect President Bush to institute
some kind of sanctions against foreign steel. The real question is which
foreign steel products will be heavily taxed or hit with high tariffs.

Why Married Men Earn More(Business Week September 17, 2001)

What explains the so-called marriage
premium--the fact that married men tend to earn more than single men of
similar backgrounds and educations? Economists have been divided on the
issue.

Some believe
that married men earn more because women tend to select mates with good
earnings prospects. Others credit the institution of marriage itself, arguing
either that it makes men more responsible and diligent or that it boosts
their productivity by freeing them from housework and allowing them to
focus more on their jobs.

In a new study in the journal Economic
Inquiry, Hyunbae Chun, of Queens College in New York, and Injae Lee,
of New York University, claim to solve the puzzle. Analyzing 1999 survey
data covering nearly 2,700 men, they find that married men earn an average
of 12.4% more per hour than never-married men, after adjusting for age,
work experience, education, and other factors that may affect both wages
and marriage prospects.

The two researchers find no evidence
that the marriage premium reflects the better economic prospects of men
who tend to get hitched. Rather, it appears related to the state of being
married--and specifically to the likelihood that wives shoulder household
tasks.

Chun and Lee report that the wage
gap declines as wives put in more hours working outside the home. While
married men whose wives aren't employed earn about 31% more per hour than
never-married men, for example, men married to women with a full-time job
earn only 3.4% more.

Thus,
having a wife who devotes most of her time to raising the kids and other
housework evidently pays off for dad in his work on the job. All of which
implies that the marriage premium will inevitably shrink as more wives
spend longer hours at outside jobs.